IFC to invest up to $30m to help Sasfin boost small-firm lending
The World Bank's International Finance Corporation (IFC) said on Tuesday that it would invest up to $30-million into South African financial services group Sasfin to enable the JSE-listed company increase lending to domestic small and medium-sized enterprises.
The three-part investment, which was subject to conditions, would consist of up to $10-million in equity, a $10-million loan, and up to $10-million in trade-finance guarantees. The equity component of the deal would give the IFC a maximum 12% shareholding in the group.
The Johannesburg-headquartered company would use the funds to increase its products offering to smaller businesses, as well as to strengthen its environmental and social lending practices.
The IFC would be entitled to a seat on the company's board and indicated it would also support Sasfin's expansion across South Africa, as well as to other parts of sub-Saharan Africa, including Malawi, Botswana and Ghana.
Sasfin CEO Roland Sassoon argued that increased financing for small and medium enterprises was crucial for the sustainable development of South Africa's private sector.
"The partnership with IFC will strengthen Sasfin's capital position during these volatile economic times and help expand lending to smaller businesses, an underserved segment of South African society," Sassoon added.
The investment would also provide the company with long-term capital, which had become increasingly expensive and scarce as many institutions cut back on credit lines amid the current global financial crisis.
IFC global financial markets director James Scriven said that the transaction would create more opportunities for South African businesses, adding that an inclusive financial sector was crucial for developing a vibrant private sector that promoted economic development and reduced poverty.
Edited by: Creamer Media Reporter |